Accessibility Links

Naomi Caine: Bond is too good to be true

May 15 2005, 1:00am, The Sunday Times

The ads promise — in great big letters — 125% of any growth in the FTSE 100 index, without risking a penny of your capital. Doesn’t that sound great? You make money if shares go up, but you don’t lose a thing if they go down.

NS&I is doing a roaring trade in these bonds. It has pulled in about £800m so far from investors who are nervous of equities, but still want the prospect of a high return from shares.

NS&I is not alone. About 200 similar bonds have come on the market this year. They are everywhere — in banks, building societies, even supermarkets. But are they as good as they look? Have we really found investment nirvana, where you can combine low risk…